Speech by President Barroso on the outcome of the European Council meeting on the Multiannual Financial Framework of 7-8 February 2013

European Parliament Open Conference of Presidents/Brussels

18 February 2013

Mr President, Honourable members,

Thank you for the invitation and the opportunity to discuss the outcome of the meeting of the European Council on 7-8 February.

Before entering into the matter of the next Multi-annual financial framework, let me mention another very important topic which was dealt with by this European Council. I am talking about trade on which important forward-looking conclusions were adopted. As you know, just a few days ago, the President of the United States, the President of the European Council and myself announced the launching of a process with the aim of reaching a ground-breaking free trade agreement between the European Union and the United States, the Transatlantic Trade and Investment Partnership. This is another very important step in our agenda for growth and jobs.

And growth and jobs must be the priority in all our endeavours, including when we discuss the MFF. When I attended the plenary session in Strasbourg the day before the European Council meeting, I made the point that we needed a constructive agreement that reflects earlier commitments on growth, investment, competitiveness and the Europe 2020 agenda. I said that we needed a financial framework with strong support for cohesion, for the Common Agricultural Policy and for external policies, including, by the way, solidarity with the poorest of the world. I also argued for more focus on the European dimension of the European Union budget and its European added value.

In the European Council, in the clearest possible terms I reminded heads of state and government of the importance of these points.

Heads of state and government put their efforts into reaching a deal that they could all accept. And the end result was an overall level for the MFF that was considerably lower than what we had proposed, with the further reductions unevenly distributed across the headings. That reflects the reality of a negotiation process involving 27 Member States where unanimity is required.

The level of EUR 960 billion in commitments and EUR 908.4 billion in payments was the balance struck between a majority of Member States who had supported the Commission's proposals throughout the negotiations and a smaller group of some net contributors who insisted on deeper cuts.

The Commission would of course have preferred an outcome with more ambition for Europe. In a formal declaration to the minutes of this European Council I stated: "The levels agreed by Heads of State and Government are below the level of ambition that the Commission considers desirable given the challenge of promoting growth and jobs across the EU in the coming years."

Respecting what was agreed unanimously by 27 heads of state or government now is the time for the Parliament to engage with the Council, and the Commission stands ready to assist in this process.

President, Honourable Members,

Despite the disappointing reductions, we need to make a balanced, an objective assessment of the results and recognise that some positive steps were taken, not least in support of the EU's growth and jobs agenda.

The basic structure of the Commission's proposal as well as some innovative instruments have been preserved, including the creation of a Connecting Europe Facility. This makes the budget a tool for competitiveness and growth with a pan-European logic.

Although the agreed amount is considerably below what the Commission proposed, we should remember that it is still well above what exists under the current period for the trans-European networks. In the case of transport, the amount will increase from 8.5 billion in the current period to more than 24 billion in the next period. And, for the first time, we will have EUR 5 billion to invest in energy infrastructure at the European level.

Likewise, the European Council agreed to increase significantly budgets for research and innovation under the Horizon 2020 programme and for the 'Erasmus For All' programme. For the first time, we will also have a dedicated programme for SMEs in the shape of the COSME programme.

Importantly, the European Council agreed to create a new Youth Employment Initiative, something that I mentioned in our last discussion in plenary. With a budget of EUR 6 billion, this is a commitment to act at European Union level on today’s main political and social challenge, which is getting our young people into work. This rightly reinforces the social dimension of our Union. And it builds on the action the Commission launched last year with 8 Member States, most affected by youth unemployment. It will also help to fund the Youth Guarantee and other measures at European and national level.

I am also very pleased it was possible to preserve the aid programme for the most deprived people. Given the opposition in some quarters, we can consider this a very positive result. Indeed, as you remember well, some have argued before the European Council that because of subsidiarity the European Union was not in the position to help the poorest in our societies. I am happy that this vision did not win.

The amounts allocated for cohesion and agriculture are significant and will be more targeted to sustainable growth and job creation. Sustainability remains a commitment that we are keeping across policies. In this regard, the greening of agricultural policy deserves to be mentioned, as for instance our commitment to climate protection.

The solidarity dimension was reinforced by adapting the rules for co-financing and pre-financing to take into account the specific situation in the most vulnerable regions and Member States. Without these provisions, some Member States would simply not be in a position to make the public investments they need in 2014 and 2015 and they need those investments urgently.

Throughout the negotiations, I have consistently repeated that there can be no MFF without the agreement of the European Parliament. The European Parliament's objectives were already clear in the interim report that you adopted last October and were clearly set out by the President of the European Parliament to the Heads of State and Government during this European Council. There can be no doubt that the Irish presidency must now engage in a serious negotiation process with the European Parliament on behalf of the Council.

An essential point for the next MFF is flexibility. You have been rightly demanding it. Indeed, as I also stated in the European Council, without proper levels of flexibility, the MFF as agreed amongst Heads of State and Government, can simply not work. The Commission considers that a difference of € 51.5 billion between commitments and payments in the next MFF can only be accepted to the extent that we have specific and maximum flexibility so as to be able to allow the Union to fulfil its obligations under the Treaty, notably article 323. For this, we need amongst other conditions the possibility of carrying over unused margins under the payment ceilings from one year to another. This is a crucial point.

I thus attach highest importance to the issue of flexibility between years and between headings for managing the gap between commitments and payments. In fact, this is much more than a technical question. It is a matter of highest substantive importance. In fact, at least as important as are the overall amounts for commitments and payments is the capacity to effectively spend the amounts foreseen. And this capacity will to a large extent depend on the solutions we will find for flexibility and by flexibility I mean maximum possible flexibility.

As you in the European Parliament, we also believe that the reform of the own resources system is essential. Work must continue on the basis of the Commission's proposals.

I also note that the European Parliament supports a mid-term revision of the whole MFF. Given the uncertainties of our world and the fact that we are looking at agreeing an MFF for 7 years I share the view that a real revision clause will be needed.

I made this point very clear in the European Council: The Commission is responsible for the budget and must ensure sound financial management of it. This will only be possible in future with tight management of spending and with the kind of flexibility the European Parliament has been calling for.

Let me finally briefly mention the situation of this year's budget to say that the Commission shares the Parliament's concerns about the level of payment appropriations. I recall the joint statements signed by the Presidents of the three institutions at the end of last year where it was clearly foreseen that the Commission would request additional payment appropriations if we have evidence that the adopted budget is insufficient to cover the needs and this is the case, we can say it already today.

The statements also foresee that the European Parliament and the Council would take position on any draft amending budget as quickly as possible in order to avoid any shortfall in payment appropriations.

President, Honourable Members,

We have already seen the first political reactions of the European Parliament to the political agreement of the Heads of State or Government. Today's discussion will be an important element in the Parliament developing its substantive studied response and its negotiating stance.

Once this is in place we, the European Commission, will fully play its role with a view to achieving the best possible deal, not just for the institutions but for the 500 million citizens of our Union. They are expecting their institutions and their representatives to deliver – and to deliver soon.

I thank you for your attention.

For more information read also:

MEMO/13/114 Closing remarks by President Barroso on the outcome of the European Council meeting on the Multiannual Financial Framework of 7-8 February 2013 (European Parliament Open Conference of Presidents)